1. Field of the Invention
The present invention relates to a streamlined system for the prepaid access to payment-based websites on the Internet and for use in payment in electronic commerce transactions. More particularly, the present invention relates to a prepaid card payment system and method enabling anonymous electronic commerce transactions, enabling e-commerce merchants, through the system""s middleman, to accept as payment not only the system""s proprietary prepaid cards, but also the prepaid cards of other third party card issuers that the system middleman has relationships with, and also including, in one embodiment, user age restrictions included in the prepaid cards for use in accessing payment-based adults-only websites.
2. Description of Related Art
Prepaid card services are well-known in the art. Such cards are typically purchased from vending machines or point of sale racks and displays and the like and come in fixed value increments, for example, $10, $20 and $50. A $10 card provides the customer with a certain amount of access time, such as with prepaid long distance telephone cards; the $20 card provides twice that amount, and so forth. Because the charges are limited to the card""s face value, neither the customer nor anyone who obtains possession of the card can run up a large bill. These cards can be used anonymously, as purchaser information is typically not required to be provided when purchasing such cards.
Several examples of Internet payment systems already exist. Many of these systems are account-based; that is, both the customer and the merchant have accounts with the system. Thus, there is no provision for anonymity. Privacy is an important issue which is only partially addressed in some systems. Security is critical to all Internet payment systems, and the encryption techniques adopted vary widely.
While not an exhaustive list, examples of Internet payment systems include DigiCash of Amsterdam, The Netherlands, CyberCash of Reston, Va., and systems proposed by various banks and credit card companies. DigiCash provides a close analogue to real cash in the sense of providing unconditional anonymity for the user through a novel cryptographic technique known as xe2x80x9cblind signatures.xe2x80x9d CyberCash offers both a credit card and a money payment service. Transactions using CyberCash are passed directly to a real bank.
In operation of such prior art systems, cards are typically batch-activated by the card provider in a limited number of predetermined values. A customer purchases one of these pre-activated cards by paying a fee. The card typically includes a predetermined identification code (which may be obscured by a scratch off material). To use the card, the customer accesses the service, enters the identification code (typically obtained from the back of the card), enters the desired number or address information for the desired destination to be contacted and access begins. When the designated value has been used, access is automatically terminated.
Prepaid card customers can obtain through their prepaid cards, currency for e-commerce transactions without credit and without payment of monthly bills. Prepaid cards are mainly bought by individuals who don""t have easy credit access, such as students, full-time mothers, retired seniors and individuals without a bank account. The cards themselves are easy to use.
Use of a prepaid stored-value card as payment for Internet transactions provides numerous advantages. For example, a prepaid stored-value card can be used in small transactions where credit cards or checks would be unrealistic. Other advantages to the consumer include enhancing the value of a prepaid stored-value card by enabling access to both real and Internet merchant environments with a single card.
In addition, use of a prepaid stored-value card is extremely advantageous for small dollar amount transactions. Often, consumers are reluctant to use, and merchants are reluctant to accept, credit card transactions for small dollar amounts. For the consumer and the merchant dealing with many of these small transactions can be a bookkeeping headache and may not be worth the expense. A merchant may also be unlikely to accept a credit card for a small dollar amount transaction because of the service fees per transaction. By permitting the use of a prepaid stored-value card to make purchases over the Internet for small dollar amounts, a merchant may very well be able to begin charging for goods and/or services that he had been providing for free in the past. Prepaid stored-value cards also address the concern of many e-commerce purchasers regarding supplying their personal and credit card information via the Internet to websites that may have little or no security and which may not safeguard or may misuse such information.
Despite the existence of prior art systems and methods such as those identified above, many sellers offering goods or services through Internet, especially very low price articles, find it difficult to sell their products, as they can not find a simple secure and practical way of receiving the payment from their potential customers. They also typically have to establish a separate relationship with each card issuer, each with its own payment processing protocols, making the use of such systems complicated.
The present invention provides a simple, easy to use prepaid card system and method for electronic commerce and enables e-commerce merchants, through one relationship with a middleman, to accept as payment prepaid cards from multiple third party issuers.
The present invention utilizes a middleman secure host server including a computer and terminals that handle the payment transaction processing and data transmission to and from transaction participants. Also communicating with the middleman secure host server is the cardholder""s computer and a merchant server. In one embodiment of the invention, the merchant server includes a web site and the merchant has contracted with the system middleman to accept prepaid stored-value card payments for goods and/or services purchased over the Internet. Thus, a consumer may use his or her prepaid stored-value card at a client terminal location in order to purchase goods and/or services from a remote merchant server. The Internet provides the routing functionality among the cardholder terminal, merchant server and middleman server.
From the cardholder""s perspective, the present invention operates in a similar fashion as using a stored-value card in a real merchant environment. The transaction process is similar to the interaction between a stored-value card and a service payment terminal in a face-to-face merchant environment, but with functionality distributed across the Internet between the cardholder, the merchant server advertising the merchant""s wares, the middleman server that manages the payment transaction processing for multiple e-commerce merchants and multiple third party prepaid card issuers in addition to the system""s proprietary prepaid card, via a secure intranet. All of these entities may be physically remote from one another with router functionality being provided by the Internet and the intranet established between the middleman secure host server, the e-commerce merchant, the card issuer and the e-commerce merchant""s bank.
In operation, when browsing merchant store fronts on the Internet and deciding to purchase goods and/or services, the cardholder selects the prepaid stored-value card payment option offered by the merchant. The cardholder then enters his or her card password or code. The cardholder""s balance and purchase amount are preferably verified by the card issuer and preferably displayed, the transaction is either approved or rejected, and the amount is deducted from the value stored on the stored-value card.
In addition, once a value has been deducted from the stored-value card, the merchant has been informed, and the card issuer""s server has recorded the transaction, the system""s middleman transaction clearing and payment administration software applications reconcile the transaction and pay the appropriate e-commerce merchant the approved amount, less an agreed commission, directly to the e-commerce merchant""s designated bank account.
The present invention provides numerous advantages to merchants who wish to sell goods and/or services over the Internet. For example, the present invention provides a payment solution for low-value transactions, enabling merchants to offer a wider range of merchandise and services online. A merchant is also provided a method to recover costs of services not previously charged for, and is provided immediate access to an existing, and rapidly growing, cardholder base. Furthermore, the present invention provides a turn-key transaction clearing and payment administration system through its software applications meaning that the merchant need not implement or become familiar with new procedures for reconciliation of transactions. Additionally, payment processing is accomplished for all system registered prepaid cards using the same software applications.
Furthermore, a merchant need only make a minimal investment in time and money to take advantage of the present invention and to accept payments over the Internet. The merchant need not engage in the development of complex software or accounting procedures. Thus, smaller merchants will especially benefit from the present invention. By establishing a business relationship with the system""s middleman and incorporating the system""s standard merchant transaction processing software, a merchant is ready to begin accepting the system""s as well as multiple third party prepaid cards as payment for goods and/or services. Because a stored-value application is used, the middleman server and the cardholder provide the details of the transaction and a merchant is relieved from having to control and keep track of a transaction. Also, the middleman secure host server and the payment processing intranet of the present system manages and provides security for the transaction. From a merchant""s point of view, the merchant knows that a consumer desires to purchase an item and that a cost has been transmitted to the consumer, thus, when the merchant receives a confirmation message, the merchant may release the item to the consumer. The merchant need not be concerned about security nor be responsible for authenticating a stored-value card nor for determining a balance on the card. Furthermore, transactions in multiple currencies can be completed through the use of the middleman.
The present invention also provides business benefits to card issuers and acquirers. Expansion of the functionality for a stored-value card increases revenue opportunities from cardholders and merchants. Also, there may be new merchant marketing opportunities for third party card issuers. One embodiment of the present invention includes the use of user age restrictions imposed on prepaid card issuance, such that the prepaid card can be used for adults-only e-commerce.